We are all Polanyians now, indeed! I agree with your point that this often cited but seldomly read book is at its core extremely insightful but suffers from some strange shortcomings (but I guess many great works are like that?).
On the methodological issues, I believe they can mostly be explained as Polanyi straining to demarcate his substantivist economic theory from those he saw as rivals, like orthodox Marxism. The substantivism comes through much more in his later work on pre-capitalist societies and I think shows the shortcomings of the Polanyian perspective; to oversimplify, he tries to show that markets in pre-capitalist societies were "not real markets", which I don't buy. Polanyi's substantivism isn't quite as over the top as Moses Finley, but I think I'm not exaggerating when I say that it's not considered all that convincing these days.
I realize this is long after the train has left the station, but for a long time I wanted to teach a course on the intellectual response to WWII -- the sweeping books that came out in the 40s in response to the war's challenge to social theory and postwar policy. TGT would be on the reading list, of course, along with The Road to Serfdom, Mannheim's Man and Society in an Age of Reconstruction, and perhaps also The Second Sex, since fascism's gender aspect was so vivid. I would love to have something representing the anti-colonial movement, since the post-WWII years were so pivotal, but it's hard to think of a single work that captures that moment. (The Origins of Totalitarianism misses the 1949 cutoff, by the way.)
It should be a great course! The anti-colonial movement was still relatively young. But Ayme Cesaire, Senghor and a bit later Fanon were writing around the same time, although I do not know whether they would make a cut if you use 1949. In the 1920-30s, M N Roy.
Anti-colonialism was in between stages, no? Perhaps in response to the truncated Wilsonian post-WWI hopes, there was a flourishing of thought in the 20s and 30s, like Roy. And then there was the wave of agitation and reflection in the 50s (add Memmi to your list), but if you have the somewhat artificial decade-of-the-forties frame, you might be out of luck on this front. I actually taught at a school where a course like this was feasible, but it was obvious there would be minimal student interest.
I'm delighted to see your review, having just read the book myself for the first time, and in this edition. It certainly is a delight in how it is written, informative in its insight, but also a perfect demonstration of how to analyse history and the economy. Thank you for sharing your thoughts on it.
To my recollection the book was created from a set of lectures Polanyi gave at Bennington College, and wasn't written (or edited) as a really coherent and consistent single book. I'd recommend Gareth Dale's 2010 analysis of most all of Polanyi's writings, including earlier ones from Vienna and those on the Poor Laws for in many ways a better account of his thought. https://books.google.ie/books/about/Karl_Polanyi.html?id=A_EeAQAAMAAJ&source=kp_book_description&redir_esc=y
That may explain some repetition & also a rather unclear ordering of chapters. It is interesting that you mentioned this because the repetitions and at times overwrought character of discussion reminded me of Sen's On inequality which is also a series of lectures.
I just read the book. I did find the writing style slightly complicated. Long sentences, old terminology felt little tedious. But this is a decades old book so it can be expected. If one has the patience to read the book, undoubtedly there are excellent passages, remarkable assertions and intellectual thought on the subject. The peculiar problems that arrived with early capitalism are well articulated. Like the mystery of sudden rise in pauperism. Early economic thinkers didn't knew about the instability of business cycles, the fluctuation (which was plenty at that time) of demand (which was much dependent on trade) and why markets just cannot put every labor to work. Only in 20th century with arrival of Keynesian (& Kaleckian) ideas, experts realized that markets don't always clear and a supporting mechanism is needed (Govt role).
There are omissions and shortcoming of Polanyi too. Like the sidelining of class struggle narrative, a narrative which is valid to this date. The reasons and danger of inequality is not discussed. Like with concentration of wealth, the political power also bends to the need of few plutocrats. Social democracy is just not possible in such conditions (a point today well understood by many thinkers).
Finally, the thesis of Polanyi and his call for much needed evolution of society were based on time when mortal danger to civilization was not clear. Had Polanyi knew about these dangers, he would've realized how crucial it is to urgently restructure our economic system. The danger comes from two major ways. First, of course is climate change and how "self regulating markets" are absolutely incompatible to meet this challenge. Second, is risk of thermonuclear war. World cannot be allowed to simmer on tensions and conflicts. Sooner or later, there will be a tragedy in such unstable world.
I must be one of the few readers of TGT that wasn't very impressed. Everyone I knew thought it was brilliant, but nothing in it persuaded me. Yes, wages really do need to be regulated for a lot of reasons, but others make that argument more powerfully. I agree that land use and tenure should also be regulated, mainly for ecological reasons, but I didn't see a sufficiently concrete argument in Polanyi that would point us to *how* that regulation should be designed. And money? Well, money has always been subject to political interventions; the real question is about credit, and I didn't find much insight in Polanyi on that front. Meanwhile, after reading Polanyi I stumbled on what seemed to me to be a far deeper analysis of laissez-faire, P. S. Atiyah's Rise and Fall of Freedom of Contract. The funny thing is that I am much closer to Polanyi's politics than Atiyah's (he's no lefty), but the latter is the one who really gets to the heart of the matter. Atiyah's is one of just a few books that significantly changed how I viewed the world. It's almost 50 years old by now, and I don't know if anyone's updated him on the basis of new scholarship.
Great review and penetrating critique; I couldn't pin my own dissatisfaction with his writing in places. And, Yes, we are all Polanyians now, except for the majority of mainstream economists who might have not even heard of Polanyi. We economists (I am a member of the tribe) still teach our students almost solely about markets, with everything else being a "distortion", including almost half of the GDP of rich countries. There is still no such thing as "society" in our world.
Very helpful analysis on Polanyi's 1944 "The Great Transformation"! I have a copy by Farrar & Rinehart, New York, Toronto, apparently printed in 1944 and with the message "This book has been manufactured in accordance with paper conservation orders of the War Production Board." I'm going to print off your post, fold it and keep it in the book. Thanks!
Very good point Perry! Cheap paper and vegetable inks are likely to fade 🙄. Once in a long while when perusing an old book, I come across a note in a margin or an underline from my Dad, or my paternal grandmother. Such notes are still there because they're done in red grease pencil or black graphite pencil. And a couple of times, one finds a tree leaf 🍁
Apologies, but I think you’ve missed Polanyi’s point. He says the *self regulating* market cannot work. Not that no markets work. His early anthropological insights are key to this - and of course then later taken up by David Graeber. He says that trade & provisioning can be easily achieved through elaborate cultural behaviour - gift giving, reciprocity & so forth. This is a *nested* system of obligations not a simplistic exchange process. So everyone in the indigenous society is provisioned. Not necessarily fairly but there is no poverty. He comes back to this point repeatedly. Poverty only arose under capitalism. The point about the *self regulating* market is that it implies that wages, capital (& land) alone are sufficient to form a (market) equilibrium. But Polanyi calls this out as: the ‘naturalistic fallacy’, ie that markets are like simple predator prey cycles where starvation corrects wages etc; As he notes in the story about the island of goats & dogs, such simplistic behaviour was never actually observed in nature. It’s a “just so” story like the ones today that say that cutting welfare will increase productivity because people will be forced into work. Predator prey cycles are also nested in ecosystems. Populations do rise & fall but it’s not an oscillation. You don’t see fields of dead deers one year & fields of dead wolves the next. You see adaptive strategies. So his whole point about embedding is to say that society sits within a nested system of obligations & complex, non linear, feedback loops. And it’s not true to say the *self regulating* market economy has created equilibrium. Where it exists in its pure form, it’s done the opposite. Global North v Global South. Rich vs poor. Surplus vs deficit. In all cases, the unregulated market has widened differences rather than stabilising. Only in social democratic Europe where the Govt tops up wages & redistributes has a *free* market economy just about worked. China is of course the big question. But their marhets are free *within* China but they absolutely do not run free capital markets.
I think Polanyi’s arguments are essential for understanding the current moment. I reread it recently for that reason & feel he should be read & understand from an anthropological & ecosystem perspective. He got it right & we should be thinking hard about how to rebalance & prevent the (fear driven) pull towards fascism.
We are all Polanyians now, indeed! I agree with your point that this often cited but seldomly read book is at its core extremely insightful but suffers from some strange shortcomings (but I guess many great works are like that?).
On the methodological issues, I believe they can mostly be explained as Polanyi straining to demarcate his substantivist economic theory from those he saw as rivals, like orthodox Marxism. The substantivism comes through much more in his later work on pre-capitalist societies and I think shows the shortcomings of the Polanyian perspective; to oversimplify, he tries to show that markets in pre-capitalist societies were "not real markets", which I don't buy. Polanyi's substantivism isn't quite as over the top as Moses Finley, but I think I'm not exaggerating when I say that it's not considered all that convincing these days.
Agree w/ all you wrote.
I realize this is long after the train has left the station, but for a long time I wanted to teach a course on the intellectual response to WWII -- the sweeping books that came out in the 40s in response to the war's challenge to social theory and postwar policy. TGT would be on the reading list, of course, along with The Road to Serfdom, Mannheim's Man and Society in an Age of Reconstruction, and perhaps also The Second Sex, since fascism's gender aspect was so vivid. I would love to have something representing the anti-colonial movement, since the post-WWII years were so pivotal, but it's hard to think of a single work that captures that moment. (The Origins of Totalitarianism misses the 1949 cutoff, by the way.)
It should be a great course! The anti-colonial movement was still relatively young. But Ayme Cesaire, Senghor and a bit later Fanon were writing around the same time, although I do not know whether they would make a cut if you use 1949. In the 1920-30s, M N Roy.
Anti-colonialism was in between stages, no? Perhaps in response to the truncated Wilsonian post-WWI hopes, there was a flourishing of thought in the 20s and 30s, like Roy. And then there was the wave of agitation and reflection in the 50s (add Memmi to your list), but if you have the somewhat artificial decade-of-the-forties frame, you might be out of luck on this front. I actually taught at a school where a course like this was feasible, but it was obvious there would be minimal student interest.
I'm delighted to see your review, having just read the book myself for the first time, and in this edition. It certainly is a delight in how it is written, informative in its insight, but also a perfect demonstration of how to analyse history and the economy. Thank you for sharing your thoughts on it.
Thank you very much Branko for an excellent analysis I’ve never read Polanyi but your writing makes think I should.
Brilliant and important discussion
To my recollection the book was created from a set of lectures Polanyi gave at Bennington College, and wasn't written (or edited) as a really coherent and consistent single book. I'd recommend Gareth Dale's 2010 analysis of most all of Polanyi's writings, including earlier ones from Vienna and those on the Poor Laws for in many ways a better account of his thought. https://books.google.ie/books/about/Karl_Polanyi.html?id=A_EeAQAAMAAJ&source=kp_book_description&redir_esc=y
That may explain some repetition & also a rather unclear ordering of chapters. It is interesting that you mentioned this because the repetitions and at times overwrought character of discussion reminded me of Sen's On inequality which is also a series of lectures.
I just read the book. I did find the writing style slightly complicated. Long sentences, old terminology felt little tedious. But this is a decades old book so it can be expected. If one has the patience to read the book, undoubtedly there are excellent passages, remarkable assertions and intellectual thought on the subject. The peculiar problems that arrived with early capitalism are well articulated. Like the mystery of sudden rise in pauperism. Early economic thinkers didn't knew about the instability of business cycles, the fluctuation (which was plenty at that time) of demand (which was much dependent on trade) and why markets just cannot put every labor to work. Only in 20th century with arrival of Keynesian (& Kaleckian) ideas, experts realized that markets don't always clear and a supporting mechanism is needed (Govt role).
There are omissions and shortcoming of Polanyi too. Like the sidelining of class struggle narrative, a narrative which is valid to this date. The reasons and danger of inequality is not discussed. Like with concentration of wealth, the political power also bends to the need of few plutocrats. Social democracy is just not possible in such conditions (a point today well understood by many thinkers).
Finally, the thesis of Polanyi and his call for much needed evolution of society were based on time when mortal danger to civilization was not clear. Had Polanyi knew about these dangers, he would've realized how crucial it is to urgently restructure our economic system. The danger comes from two major ways. First, of course is climate change and how "self regulating markets" are absolutely incompatible to meet this challenge. Second, is risk of thermonuclear war. World cannot be allowed to simmer on tensions and conflicts. Sooner or later, there will be a tragedy in such unstable world.
I must be one of the few readers of TGT that wasn't very impressed. Everyone I knew thought it was brilliant, but nothing in it persuaded me. Yes, wages really do need to be regulated for a lot of reasons, but others make that argument more powerfully. I agree that land use and tenure should also be regulated, mainly for ecological reasons, but I didn't see a sufficiently concrete argument in Polanyi that would point us to *how* that regulation should be designed. And money? Well, money has always been subject to political interventions; the real question is about credit, and I didn't find much insight in Polanyi on that front. Meanwhile, after reading Polanyi I stumbled on what seemed to me to be a far deeper analysis of laissez-faire, P. S. Atiyah's Rise and Fall of Freedom of Contract. The funny thing is that I am much closer to Polanyi's politics than Atiyah's (he's no lefty), but the latter is the one who really gets to the heart of the matter. Atiyah's is one of just a few books that significantly changed how I viewed the world. It's almost 50 years old by now, and I don't know if anyone's updated him on the basis of new scholarship.
Great review and penetrating critique; I couldn't pin my own dissatisfaction with his writing in places. And, Yes, we are all Polanyians now, except for the majority of mainstream economists who might have not even heard of Polanyi. We economists (I am a member of the tribe) still teach our students almost solely about markets, with everything else being a "distortion", including almost half of the GDP of rich countries. There is still no such thing as "society" in our world.
Very helpful analysis on Polanyi's 1944 "The Great Transformation"! I have a copy by Farrar & Rinehart, New York, Toronto, apparently printed in 1944 and with the message "This book has been manufactured in accordance with paper conservation orders of the War Production Board." I'm going to print off your post, fold it and keep it in the book. Thanks!
Thank you! Very kind of you.
It is obviously a very precious first edition.
Just make sure the Substack is printed out in accordance to FSC, recycled paper, and ink quality that can last another 80+ years!
Very good point Perry! Cheap paper and vegetable inks are likely to fade 🙄. Once in a long while when perusing an old book, I come across a note in a margin or an underline from my Dad, or my paternal grandmother. Such notes are still there because they're done in red grease pencil or black graphite pencil. And a couple of times, one finds a tree leaf 🍁
Apologies, but I think you’ve missed Polanyi’s point. He says the *self regulating* market cannot work. Not that no markets work. His early anthropological insights are key to this - and of course then later taken up by David Graeber. He says that trade & provisioning can be easily achieved through elaborate cultural behaviour - gift giving, reciprocity & so forth. This is a *nested* system of obligations not a simplistic exchange process. So everyone in the indigenous society is provisioned. Not necessarily fairly but there is no poverty. He comes back to this point repeatedly. Poverty only arose under capitalism. The point about the *self regulating* market is that it implies that wages, capital (& land) alone are sufficient to form a (market) equilibrium. But Polanyi calls this out as: the ‘naturalistic fallacy’, ie that markets are like simple predator prey cycles where starvation corrects wages etc; As he notes in the story about the island of goats & dogs, such simplistic behaviour was never actually observed in nature. It’s a “just so” story like the ones today that say that cutting welfare will increase productivity because people will be forced into work. Predator prey cycles are also nested in ecosystems. Populations do rise & fall but it’s not an oscillation. You don’t see fields of dead deers one year & fields of dead wolves the next. You see adaptive strategies. So his whole point about embedding is to say that society sits within a nested system of obligations & complex, non linear, feedback loops. And it’s not true to say the *self regulating* market economy has created equilibrium. Where it exists in its pure form, it’s done the opposite. Global North v Global South. Rich vs poor. Surplus vs deficit. In all cases, the unregulated market has widened differences rather than stabilising. Only in social democratic Europe where the Govt tops up wages & redistributes has a *free* market economy just about worked. China is of course the big question. But their marhets are free *within* China but they absolutely do not run free capital markets.
I think Polanyi’s arguments are essential for understanding the current moment. I reread it recently for that reason & feel he should be read & understand from an anthropological & ecosystem perspective. He got it right & we should be thinking hard about how to rebalance & prevent the (fear driven) pull towards fascism.